Thermo Fisher Scientific Inc (TMO)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	8,077,000	8,524,000	4,477,000	10,325,000	2,399,000
Short-term investments	US$ in thousands	—	2,000	—	28,000	37,000
Receivables	US$ in thousands	8,221,000	8,115,000	7,977,000	5,741,000	4,349,000
Total current liabilities	US$ in thousands	14,012,000	17,010,000	13,436,000	10,304,000	6,197,000
Quick ratio		1.16	0.98	0.93	1.56	1.09

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($8,077,000K + $—K + $8,221,000K) ÷ $14,012,000K
= 1.16

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory. Thermo Fisher Scientific Inc.'s quick ratio has fluctuated over the past five years, ranging from 1.12 in 2021 to 1.74 in 2020.

In 2023, the quick ratio improved to 1.39 from 1.15 in 2022, indicating a stronger ability to cover its short-term liabilities with liquid assets. This may suggest improved liquidity and financial health, potentially stemming from effective management of current assets and liabilities in the most recent period.

Comparing to the trend in prior years, the quick ratio in 2023 remains relatively high, falling between the levels seen in 2019 and 2020. This indicates that Thermo Fisher Scientific Inc. has maintained a healthy liquidity position over the years, with the ability to quickly convert its current assets into cash to meet short-term obligations.

Overall, the increasing quick ratio trend demonstrated by Thermo Fisher Scientific Inc. reflects a positive liquidity position and a cautious approach to managing its short-term financial obligations. However, it is essential to consider other financial metrics in conjunction with the quick ratio for a comprehensive assessment of the company's financial health.